Plastic Packaging Tax (Descriptions of Products) Regulations 2021
The Committee consisted of the following Members: Chair: Mr
Virendra Sharma † Byrne, Liam (Birmingham, Hodge Hill) (Lab) Cryer,
John (Leyton and Wanstead) (Lab) † Farris, Laura (Newbury) (Con)
Graham, Richard (Gloucester) (Con) † Hudson, Dr Neil (Penrith and
The Border) (Con) † Johnston, David (Wantage) (Con) † Jones, Andrew
(Harrogate and Knaresborough) (Con)...Request free trial
Plastic Packaging Tax
(Descriptions of Products) Regulations 2021
The Committee consisted of the following Members:
Chair:
† (Birmingham, Hodge Hill)
(Lab)
(Leyton and Wanstead) (Lab)
† (Newbury) (Con)
(Gloucester) (Con)
† (Penrith and The Border)
(Con)
† (Wantage) (Con)
† (Harrogate and Knaresborough)
(Con)
† (Shrewsbury and Atcham)
(Con)
† (Truro and Falmouth)
(Con)
† (Lord Commissioner of Her
Majesty's Treasury)
† (Erith and Thamesmead)
(Lab)
† Qaisar, Ms Anum (Airdrie and Shotts) (SNP)
(Huddersfield)
(Lab/Co-op)
(Hemsworth) (Lab)
† (Blaydon) (Lab)
† (Exchequer Secretary to the
Treasury)
† (Montgomeryshire) (Con)
Liam Laurence Smyth, Committee Clerk
† attended the Committee
First Delegated Legislation Committee
Monday 31 January 2022
[Mr in the Chair]
Plastic Packaging Tax (Descriptions of Products) Regulations
2021
4.30pm
The Chair
Before we begin, I would like to encourage Members to observe
social distancing and wear masks.
The Exchequer Secretary to the Treasury ()
I beg to move,
That the Committee has considered the Plastic Packaging Tax
(Descriptions of Products) Regulations 2021 (S.I. 2021, No.
1417).
The statutory instrument seeks to tackle plastic packaging waste
in the most effective way possible by making sure that the
legislation is properly targeted. I will first speak briefly
about the context of the legislation, before moving on to the
plastic packaging tax and the statutory instrument itself.
The Government are committed to tackling plastic pollution.
Plastic waste is a major environmental threat. Plastics do not
decompose. Plastic waste can last centuries. Those centuries may
be spent in landfill sites, but too often plastic ends up where
it should not—littering the streets and countryside, piling up on
beaches and in rivers, and caught on the tides in the world’s
oceans. In this country alone we generate nearly 5 million tonnes
of plastic each year. In 2001 we recycled just a quarter of all
our packaging waste. By 2017 that proportion had grown to 60%,
but we can and should go further.
As hon. Members may recall, in 2018 the Government committed to
introduce a tax on plastic packaging—a pledge we reiterated in
our manifesto in 2019. This tax has already been legislated for
in the Finance Act 2021. The tax will be charged at £200 per
tonne of plastic packaging that is manufactured or imported in
the UK, and which does not contain at least 30% recycled plastic.
That will provide clear economic incentives for businesses to use
recycled plastic over virgin plastic. This will in turn
incentivise packaging producers to overcome the challenges of
including recycled plastic in packaging. It will also incentivise
increased collection and recycling of plastic waste, reducing the
amount incinerated, dumped in landfill or strewn about so that it
finds its way into the natural environment.
We estimate that the tax will lead to around 40% more recycled
plastic being used in packaging in 2022-23 alone. Given that the
use of new plastic generates more carbon than the use of recycled
plastic, we estimate that the tax will save nearly 200,000 tonnes
of carbon dioxide emissions in its first year, thereby achieving
a dual purpose of reducing carbon emissions as well as reducing
plastic waste.
This tax’s introduction has been subject to a long process of
engagement and deliberation, first through two consultations in
2019 and 2020, and then through three technical consultations on
the necessary legislation, including a consultation on the
statutory instrument we are discussing. At every stage, the
Government have listened to a range of organisations, including
plastic packaging manufacturers, trade bodies across the plastics
value chain and other interested stakeholders. Following these
discussions and deliberations, in the Finance Act 2021 the
Government introduced legislation setting out the tax’s initial
scope, based on a well-established definition of packaging. The
definition is similar to that in the producer responsibility
obligations set out by the Department for Environment, Food and
Rural Affairs, which also seek to boost recycling rates.
The tax and the reforms to the producer responsibility
obligations are designed to be complementary. However, unlike the
producer responsibility obligations, this tax is charged at the
point of manufacture and import, and has a different definition
of packaging aimed at reducing the burdens on businesses while
securing environmental aims. The definition of plastic packaging
included in the Finance Act 2021 covers products designed to
contain, handle, protect, deliver or present goods at any stage
in the supply chain. It does not matter whether the product is
used in the supply chain or by the end consumer. For example,
bubble wrap and tape are both designed to be suitable in the
supply chain, but can also be used by consumers. This definition
ensures that items such as Tupperware and other homewares, which
are not designed to be suitable for use in the supply chain, are
not subject to the tax.
The primary legislation introduced in the Finance Act 2021 also
exempts packaging products that are permanently set aside for a
non-packaging function. By doing so, it makes sure that items
that are manufactured or imported for a completely different
purpose than a packaging function are not inadvertently captured
within the tax. For example, plastic film that is applied to
whiteboards used in teaching institutions will not be taxed, and
nor would, for instance, plastic bottles made for an art
installation.
I thank hon. Members and others who have taken the time to
explain to Her Majesty’s Revenue and Customs and the Treasury the
highly specialised nature of silage film and its use for the
production of silage. After careful analysis of additional
information, I can advise that, although silage film is within
the overall scope of the tax, it falls under an exemption for
items where packaging is not the primary function. That is
because its primary purpose is to enable the fermentation
necessary for the production of silage, rather than the packaging
of silage. Manufacturers and importers of silage film will still
need to count it towards the 10 tonne threshold to determine
whether they need to register and keep a record of it being set
aside for a non-packaging function to support HMRC’s compliance
activity, but where that is done no tax will need to be paid.
Turning to the statutory instrument specifically, although it is
critical that we tackle the scourge of plastic waste, we do not
want to tax all plastic products. However, taken in isolation,
the measures in the Finance Act 2021 would mean that the tax
would apply to plastic products that do not typically contribute
to the environmental harm that the tax is designed to address.
Equally, the tax would not apply to single-use plastic packaging
designed for the end consumer, such as bin bags or carrier bags.
The 2021 Act allowed for additional regulations to amend and
improve the definition of packaging within the scope of the tax,
and that is what these regulations do.
The statutory instrument will add to the scope of the tax
packaging products that are specifically designed for a
single-use packaging function by a user or consumer for goods or
waste—for example, bin bags and carrier bags, as I mentioned, as
well as nappy sacks and disposable plastic plates. In addition,
the instrument will remove packaging that is designed for the
long-term storage of goods from the scope of the tax. To fall
within that category, packaging must be designed to be sold
filled with goods and be reused for the same or similar goods—for
example, a first aid box, a glasses case or a power tool
case.
The instrument also removes from the scope of the tax products
where the plastic is an integral part of the goods, without which
the goods cannot reasonably be used or consumed. That removes
products where it is not possible to reasonably separate the
packaging from the item. To fall within that category, the
packaging must be discarded with the goods or after the goods
have been used or consumed. That includes printer cartridges,
aerosol actuators and the ball of a roll-on deodorant. Finally,
the instrument removes from the scope of the tax products that
are designed for reuse in the presentation of goods, including
shop fittings, display shelves and presentation stands.
These adjustments follow the substantial consultation and
engagement with businesses that I mentioned, and will mean that
the tax better fulfils its objective of incentivising the
recycling of plastic and reduced plastic waste in a targeted way.
I therefore commend the statutory instrument to the
Committee.
4.38pm
(Erith and Thamesmead)
(Lab)
It is a pleasure to serve under your chairmanship, Mr Sharma, I
believe for the first time. I thank the Minister for her comments
about the regulations. As I have said before, the Opposition
support the plastic packaging tax, as we believe that it is an
important tool in tackling the crisis of plastic pollution that
we face.
Before I come to the detail of the regulations and some of the
concerns that we have about them, I will take the Minister back
to the supposed aims of the plastic packaging tax. When the
Government initially introduced the tax, in the last but one
Finance Bill, they stated:
“The tax will encourage the use of recycled plastic instead of
new plastic within packaging. It will create greater demand for
recycled plastic, and in turn stimulate increased levels of
recycling and collection of plastic waste, diverting it away from
landfill or incineration.”
That is an important principle. The Minister just mentioned that
the tax is supposed to incentivise the use of recycled plastic,
and in turn reduce the overall amount of virgin plastic packaging
being produced and consumed. Logically, the tax would have the
greatest impact were it extended to as many items as possible. It
is therefore somewhat concerning to see three new exemptions
being introduced at this stage.
As I said during the passage of the original legislation, we
supported common-sense exemptions such as for medical packaging
but believed that the list of exemptions should be kept as short
as possible. I want to take the new exemptions in turn, and ask
the Minister some questions about each. The first is about
packaging products designed primarily for storage, such as video
game cases and toolboxes. In the explanatory notes, the
Government say that those products
“do not typically contribute to plastic pollution.”
Can the Minister explain? Surely they are thrown away at some
point and end up as plastic waste. The explanation also ignores
the upstream environmental impact of producing the plastics. The
Government have not said that they intend the tax to apply only
to single-use items, so why is that justification now being used
to exempt certain products?
The second exemption is for plastic packaging integral to the
product being sold; the Government give examples such as printer
cartridges, tea bags and mascara brushes. The Minister mentioned
the encouragement of long- term storage of those goods, but will
she give a further explanation, other than that, as to why they
are being exempted—a bit more about the justification? We are
concerned about whether the Government want greater use of
recycled plastic in those products. They seem to be lowering
their ambition significantly in this area.
Finally, the Government are exempting packaging used primarily
for presentation. I make the same point as I did about storage
items: it is not clear how these products do not contribute to
plastic pollution through their production and disposal. Does the
Minister not think that including them in the tax would encourage
the use of recycled plastic or alternative materials?
The regulations add a new category to the scope of the tax:
single-use plastic items used as packaging within the home, such
as bin bags and disposable plates. We are happy to support that
addition, but it takes us back to the point I made earlier. With
these amendments, the Government seem to be changing the focus of
the measure from encouraging recycled plastic and reducing
plastic waste in general towards a narrower focus on single-use
plastic. Is that correct? What assessment has the Treasury made
about whether the changes will lead to more plastic waste being
produced and how much?
The Minister mentioned that the definition was introduced to
reduce the burden on businesses; I take this opportunity to raise
a couple of points made by the British Plastics Federation and
the Food and Drink Federation on behalf of their members, who
will ultimately be subject to the tax. First, they say that there
is confusion among businesses about exactly what products are
eligible for the tax. Hopefully, the regulations will be helpful,
but will the Minister consider whether HMRC needs to issue
further detailed guidance?
I appreciate that the Minister mentioned that there has been a
lot of consultation with relevant organisations, particularly
with this SI, but there is an issue about the recycled content
verification system, which ensures that imported packaging is
subject to the same level of scrutiny as packaging produced in
the UK. What is being done to ensure that UK producers are not
being treated unfairly?
There are also concerns that, due to the lack of recycled
materials in the UK, producers may struggle to meet the 30%
threshold even when they wish to. There are specific issues in
the food packaging sector, where there is limited regulatory
approval for recycled products to be used, which the Food and
Drink Federation has raised. Finally, it also raises the issue of
chemical recycling and a potential problem whereby the mass
balance approach to certifying chemically recycled products will
not be accepted for the purposes of the plastic packaging tax in
April 2022. Can the Minister respond to those practical points
from the industry? If she is unable to do so today, will she
write to me?
I have said before that we want to see a plastic packaging tax
that is ambitious and makes a real impact in reducing plastic
pollution. Just last week, the Environmental Investigation Agency
released a report saying that plastic pollution is now a global
emergency nearly equivalent to that of climate change itself. It
has shown that the toxic pollution resulting from over-production
of virgin plastics and their lifecycles is irreversible, and that
it directly undermines our health, drives biodiversity loss,
exacerbates climate change and risks generating large-scale
harmful environmental changes. For those reasons, we cannot
afford to slow down the fight against plastic pollution. We hope
that the plastic packaging tax can be part of that fight, but we
need reassurances from the Minister that these changes will not
undermine its impact.
4.46pm
Ms Anum Qaisar (Airdrie and Shotts) (SNP)
It is a pleasure to serve under your chairmanship, Mr Sharma. The
amount of waste going to landfill in Scotland is at its lowest
level since records began, but of course more needs to be done in
order to maintain progress. Scotland has met and exceeded the EU
target to reduce the quantity of biodegradable waste disposed of
to landfill, with that waste continuing to fall to its lowest
level on record. The Scottish Government are committed to
matching or exceeding the standards set out by the EU single-use
plastics directive, and are determined to accelerate progress to
meet our ambitious waste reduction, recycling and climate change
targets.
4.47pm
I will briefly respond to some of the points from the shadow
Minister, the hon. Member for Erith and Thamesmead. I welcome her
support for the tax and her overall support for the legislation,
and I thank her for reminding us of the objectives, including our
ambition to increase the use of recycled plastic over virgin
plastic.
The hon. Lady raised concerns about some of the exemptions that I
have outlined today, or about the targeting of the tax. Overall,
we agree on the ambition to limit exemptions to ensure that the
tax achieves its objective. The Government are determined to be
pragmatic, but also to ensure that the tax achieves its objective
of targeting those plastics that are particularly harmful to the
environment. As I said in my opening speech, we carried out a
huge amount of consultation and engagement with industry and
those interested in this tax and legislation in order to get the
targeting of the taxation right. That has led to the details of
this statutory instrument, with the very specific exemptions that
I outlined and the inclusion of certain single-use plastics that
are used for disposal, for instance—bin bags and so on.
I say to the hon. Lady, who suggested that this was too narrow a
focus, that this is a hugely ambitious tax, which sets out to
change the incentives so that we see much greater use of recycled
plastic and more plastic being recycled into the plastic supply
chain, leading to—this picks up on her point about what
assessment of impact there has been—our expectation that we will
see a 40% increase in the use of recycled plastic following the
introduction of the tax.
To pick up on the hon. Lady’s point about whether there are
concerns or confusion about the clarity of the regulations, I
should say that substantial guidance has been set out on which
products are in the scope of the tax and how it should be
applied; the Government have worked closely with the sector and
industry on preparing the details of that. Businesses that are
concerned or uncertain can indeed contact HMRC, which will lead
on the implementation.
Will the Minister give way?
Let me cover the comments that the hon. Lady made, if she will
give me a moment. She asked about imported packaging. I assure
her that we are determined that there should be a level playing
field, so the tax will apply equally to packaging manufactured in
the UK and that imported into the UK.
The hon. Lady then asked about food packaging. We have consulted
with the sector on that; we recognise some of the challenges but
also the progress already being made to increase the use of
recycled plastic in food packaging. We would not want to
disincentivise further progress along those lines so we very much
include that consideration, as with other examples of when it is
more challenging to use recycled plastic.
Finally, the hon. Lady asked about chemical recycling; I am
absolutely aware of questions from that part of the recycling
sector. We are keen to see the use of chemically recycled
plastic, which is really important for increasing the supply and
quality of recycled plastic—especially some types of plastic that
are hard to make with mechanically recycled plastic. The
Government are investing in chemical recycling facilities to
support the development of the technology. This legislation
allows for chemically recycled plastic to contribute towards the
30% recycled plastic threshold for the purposes of the tax. I
know that some have argued that that is not enough, but the mass
balance approach that they are arguing for is a significant
shift; it is about a chemically recycled plastic being attributed
to packaging rather than contained in packaging. That is quite a
fundamental change. We are looking at that but it would require
new legislation, and we will not rush into that at this
point.
In conclusion, this is an important piece of legislation, which
will help this country fight the scourge of plastic pollution and
cut carbon emissions by boosting recycling rates. Ultimately, it
will play a part in unlocking economic benefits through the
encouragement of green growth and innovation. Equally, the
instrument will make sure that we tackle plastic waste in a
proportionate and effective way, for the benefit of consumers and
businesses alike.
I thank the Minister for answering the points I raised. I welcome
the fact that detailed guidance will be provided by HMRC,
particularly in relation to businesses. I appreciate that the
Government have done extensive consultation with a number of
stakeholders, but the ones I have engaged with represent quite a
number of businesses. What are the timescales when it comes to
HMRC’s publication of the guidance? There has been confusion
about what businesses are eligible to do, and it is important
that we get the issue right.
I am happy to respond briefly. Guidance has in fact already been
published; this particular guidance first came out in November,
and the most recent update was just a couple of days ago. I hope
that answers the questions put by the businesses that the hon.
Lady referred to; they can, of course, follow up with HMRC if
they have any further questions.
Question put and agreed to.
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